ARGUMENT 


IN  FAVOR  OF 

RAILWAY  CONSOLIDATION 


UPON  A WIDER  BASIS 


THAN  THAT  PEOPOSED  BY  THE  TEOY  & BOSTON  AND  VEEMONT 
& MASSACHUSETTS  EAILEOAD  COMPANIES, 

ADDRESSED  TO 


THE  RAILWAY  COMMITTEE  OF  THE  LEGISLATURE  OF 
MASSACHUSETTS,  FEB.  7,  1873, 


BY  x 

^ DERBY. 


* 


BOSTON : 

PRINTED  BY  RAND,  AVERY,  & CO. 

1873. 


ARGUMENT  OF  HON.  E.  II.  DERBY. 


Mr.  Chairman  and  Gentlemen  of  the  Committee, 

I have  the  honor  to  appear  here  to-day  in  behalf  of  the 
Fitchburg  Railroad,  to  advocate  consolidation  upon  a larger 
scale  and  more  comprehensive  plan,  and  to  point  out  the 
deficiencies  of  the  plan  already  presented. 

I shall  deal  first  with  the  last  suggestion,  and  point  out  the 
deficiencies  of  the  present  plan,  and  notice  the  leading  argu- 
ments which  have  been  brought  forward  in  favor  of  it. 

The  subject  is  one  to  which  I have  devoted  a considerable 
portion  of  a lifetime.  It  is  now  thirty-four  yeai^s  since  I had 
the  honor  to  be  chosen  a director  of  the  Western  Railroad, 
to  serve  there  several  years,  to  invoke  the  aid  of  the  State,  and 
to  remain  in  the  direction  of  the  company  until  the  great  work 
was  consummated,  and  the  line  carried  over  the  mountains. 
In  the  course  of  the  investigations  which  were  then  made  in 
the  early  surveys  for  the  Western  Road,  I found  the  true  route 
to  the  West  was  under,  and  not  over,  the  mountains.  I had 
occasion  to  fall  back  upon  the  plans  for  a tunnel,  which 
originated  with  Loammi  Baldwin,  which  were  subsequently 
advocated  by  Gen.  Bernard,  who  planned  the  fortresses  of  the 
United  States  (an  engineer  of  Napoleon),  and  which  were  after- 
wards advocated  strenuously  by  Gen.  Dearborn,  but  which  were 
set  aside,  when  the  railroad  came  to  be  built,  by  the  energy  and 
wit  of  David  Henshaw  of  Leicester,  by  the  Blisses  of  Spring- 
field,  the  Pomeroys  of  Pottsfield,  and  the  Lincolns,  and  other 
distinguished  men,  of  Worcester:  so  that  a route  was  adopted 
over  the  mountain,  instead  of  under  it,  in  the  first  instance. 


4 


And  probably  it  was  fortunate  for  the  State  that  this  tunnel 
was  not  then  grasped  for  a canal,  or  for  the  first  railroad  to  the 
West,  because  it  would  have  been  premature,  and  might  have 
led  the  State  into  a large  expenditure ; and  a canal  would  have 
proved  unremunerative,  like  the  Westfield  and  Blackstone 
Canals.  It  was  fortunate,  also,  that  the  line  was  carried  over  the 
mountain,  instead  of  under  it;  for,  if  it  had  been  carried  under 
it,  we  should  have  had  no  railroad  to  Pittsfield,  and  possibly 
none  to  Springfield ; the  route  being  so  much  more  easy  for  the 
passage  of  the  mountain  on  the  one  line  than  upon  the  other. 

But  I will  make  no  further  preface  to  what  I wish  to  say.  I 
do  not  rise  to  make  a florid  speech,  but  to  present  a series  of 
points,  in  which  I shall  endeavor  to  deal  with  the  facts  and 
arguments  which  have  been  adduced  here  in  favor  of  an  im- 
perfect system  of  consolidation.  I shall  present  to  you  points, 
rather  than  a speech,  in  support  of  our  plan. 

I will  first  deal  with  the  suggestions  which  were  made 
here  by  Mr.  Allen ; and  I take  the  ground  that  the  State  of 
Massachusetts,  as  well  as  the  Fitchburg,  and  Vermont  and 
Massachusetts  Railroads,  are  as  free  as  air,  so  far  as  any  ar- 
.rangement  to  terminate  this  road  at  Troy,  and  to  consolidate 
upon  the  city  of  Troy,  has  been  made.  There  are  no  agree- 
ments leading  to  that,  except  such  as  have  either  been  set  aside 
by  the  course  of  events,  or  such  as  do  not  bind  either  the  State 
or  companies  to  which  I have  referred. 

1.  My  first  point,  then,  is,  that  the  State  is  not  hampered  by 
any  contract,  nor  are  the  Vermont  and  Massachusetts,  or  Fitch- 
burg Railroads,  hampered  by  any  engagement.  It  is  true,  that, 
in  the  charter  of  the  Troy  and  Greenfield  Railroad  Company, 
there  was  a clause  that  it  might  connect  with  any  railroad  in 
New  York  or  Vermont.  But  that  did  not  identify  it  with 
Troy.  It  was  a broad  provision,  sufficient  to  reach  any  rail- 
ways beyond  the  mountains,  and  did  not  confine  it  to  the  city 
of  Troy.  Then,  in  regard  to  the  lease  of  the  Vermont  South- 


ern  Road,  — a little  road  of  six  miles.  Some  allusion  has  been 
made  to  a suggestion  for  the  consolidation  of  the  roads  made 
by  that  road,  — a road  out  of  the  State,  in  the  State  of  Ver- 
mont. There  is  something  said  upon  that  subject  in  the  con- 
tract as  to  that  branch  by  the  Troy  and  Greenfield  Railroad 
Company;  but  the  Troy  and  Greenfield  Railroad  is  absorbed  by 
the  State.  It  has  been  surrendered  to  the  State.  The  Southern 
Vermont  Road  is  out  of  the  State;  and  any  compact,  perfect  or 
imperfect,  made  for  that  road  with  the  Troy  and  Boston  Road, 
by  the  Troy  and  Greenfield,  does  not  bind  the  Fitchburg,  or  the 
Vermont  and  Massachusetts  Railroads,  or  the  State.  But  really 
there  is  no  compact  of  that  kind  now  obligatory.  If  there  were 
one,  it  has  been  modified  (and  that  is  my  second  point)  by  the 
changed  circumstances  and  changed  posture  of  the  railroads 
and  canals  of  New  York. 

2.  At  the  time  when  this  road  — the  Troy  and  Boston  — was 
started,  Troy  was  considered  one  of  the  objective  points,  be- 
cause the  canal  terminated  there,  and  carried  two-thirds  or 
three-quarters  of  the  freight  which  came  through  the  State, 

The  Erie  Canal  was  the  great  avenue  of  trade : the  railroads 
of  the  State  were  almost  a sealed  book.  Very  shortly  before, 
I had  written  in  one  of  the  Buffalo  papers  that  the  lion  of  the 
West  should  no  longer  be  trammelled  like  a Northern  bear 
through  the  winter;  for  there  was  a prohibition  against  carry- 
ing freight  upon  the  railroads.  And  when  the  prohibition  was 
removed,  partly  at  our  instance,  there  came  up  the  question  of 
tolls;  and  a toll  was  put  upon  the  railroads  for  the  benefit  of 
the  canal.  When  the  Troy  and  Boston  Railroad  was  started, 
the  railroads  were  carrying  less  than  a million  tons ; while  the 
canal  was  carrying  four  millions  of  tons.  But  now  that 

is  all  changed.  Lumber  and  corn  remain  upon  the  canal;  but 
nearly  all  the  valuable  freight,  such  as  seeks  the  railroads,  is 
carried  by  the  New-York  Central  and  the  Erie  Railroads.  The 
canal  has  become  a mere  droger,  a carrier  of  coarse  freight,  and 


d 


remains  as  it  was  twenty  years  ago,  or  with  very  slight  increase : 
so  that  now  the  objective  point  is  not  Troy  to  meet  the  canal, 
but  it  is  on  the  railroads  which  are  carrying  ten  mil- 

lions of  tons  across  New  York.  That  *is  one  great  change. 
Then  there  was  no  bridge  at  Albany;  and  Troy  was  looked  to, 
because  there  was  a bridge  at  that  point  across  the  Hudson. 

3.  I come  now  to  the  third  point,  which  is  this : that  there 
was  at  that  time  a survey  made,  which  was  alluded  to  by  Mr. 
Robinson  this  morning,  — a survey  for  a railroad  from  Eagle 
Bridge,  upon  the  Troy  and  Boston  Road  to  Saratoga,  and  from 
Saratoga  to  Sackett’s  Harbor.  One  of  the  objective  points 
when  the  Troy  and  Boston  line  was  begun  was  Sackett’s  Har- 
bor. It  was  not  Troy  alone;  for  Troy  was  on  the  road  to  New 
York.  We  were  looking  westerly  and  northerly,  to  the  vast 
traffic  upon  the  St.  Lawrence  and  upon  Lake  Ontario;  and 
Sackett’s  Harbor  — which,  during  the  last  war,  grew  up  to  be  a 
great  port  of  the  Lakes  — is  delineated  upon  a map  by  Mr.  Ed- 
wards, in  his  printed  report  (which  I shall  bring  here,  and  put 
into  the  case  before  your  sessions  close)  as  the  terminal  point. 
Therefore,  not  having  bound  ourselves  to  Troy,  having  said  we 
were  going  towards  the  Lakes,  and  the  canals  and  railroads  hav- 
ing changed  their  relative  positions,  there  are  strong  reasons 
why  we  should  make  our  objective  point  upon  the  Lakes. 

Another  reason  for  this  has  sprung  up.  At  that  time,  most 
of  the  railroads  chartered  in  the  State  of  New  York  were  Bos- 
ton railroads.  The  Auburn  and  Rochester  Railroad,  I think, 
originated  in  Boston;  the  Utica  and  Schenectady  Road  and  the 
Buffalo  Road  were  aided  by  Boston.  Some  of  our  large  capi- 
talists— the  Welds,  the  Thayers,  and  others  — were  largely  inter- 
ested in  them  ; and  there  were  transfer  offices  here.  But  in  a little 
while  these  roads  ceased  to  be  Boston  roads,  and  became  New- 
York  roads.  They  were  consolidated,  and  finally  the  whole 
line  from  Buffalo  to  New  York  became  a New-York  line,  known 
as  “the  New-York  Central  and  Hudson-river  Railroad.”  We 


were  no  longer  looking  to  friends,  but  to  foes,  competing  for  the 
trade  of  the  West  with  our  Boston  roads,  to  lines  beginning  at 
Lake  Erie,  and  terminating  at  the  city  of  New  York  ; and,  if  we 
should  ■come-  to  Troy,  we  were  doming  there  to  connect  not 
with  a Boston,  but  a New-York  enterprise,  which  had  been 
watered  to  the  extent  of  eighty  per  cent : we  were  placing  our- 
selves and  the  State  of  Massachusetts  in  a state  of  dependence 
upon  Mr.  Vanderbilt,  who  watered  the  stock.  All  these,  gentle- 
men, seem  to  me  to  be  reasons  why  we  are  precluded  from  con- 
solidating the  Troy  and  Boston  Road  with  this  line.  We  must 
look  to  the  interests  of  Massachusetts  rather  than  to  the  inter- 
ests of  New  York. 

4.  I have  another  suggestion  to  make  upon  this  subject,  which 
springs  from  an  examination  made  within  the  last  few  weeks. 
I will  put  into  the  case,  from  the  reports  of  the  State  of  New 
York,  an  extract  from  the  report  of  this  Troy  and  Boston  Rail- 
road. You  will  find  that  the  capital  of  this  line  of  thirty-five 
miles,  which  was  originally  built  for  about  two  milions  of  dollars, 
•ex)  mo  thing  -like  sixty  or  seventy  thousand  dollars  per  mile,  has 
now  been  carried  to  thirty-five  or  thirty-seven  hundred  thou- 
sand dollars.  Four  years  ago  it  stood,  according  to  the  reports 
of  the  State  of  New  York,  with  a capital  of  six  hundred 
thousand  dollars,  and  with  a debt  short  of  two  million^ 
dollars.  To-day  it  stands  with  a debt  substantially  the 
same  amount,  — a little  less  than  two  millions,  — and  a stock 
of  a million  and  a half.  A small  amount  of  capital  may  have 
been  paid  in  and  applied  to  the  reduction  of  the  debt;  but 
nearly  all  the  residue  recently  created  is  watery.  Some 
step  has  been  taken  by  which  this  road  has  been  carried  up 
from  its  original  cost  (less  than  two  million^  pi  dollars)  to 
a cost  of  thirty-five  hundred  thousand^/  yOf dollars,  for  the  pur- 
pose, as  it  seems  to  me,  of  putting  it  on  a footing,  first  with  the 
Vermont  and  Massachusetts,  whose  capital  and  debt  is  three 
millions  and  a half,  and  then  on  a par  with  the  Fitchburg 


8 


Railroad,  which  Avith  a hundred  and  forty  miles  of  track  in  the 
place  of  thirty-five  miles,  and  with  a property  worth  to-day 
seven  millions/o^dollars,  is  to  have  the  Troy  and  Boston  Road 
put  upon  a fooung  of  equality  with  it.  A year  or  tAvo  ago  the 
capital  of  the  Fitchburg  Road  Avas  but  three  millions  and  a half. 
The  Troy  and  Boston  Road  — Avith  one-quarter  of  its  miles  of 
track;  with  less  than  half  the  engines  that  are  to  be  found  upon 
the  Fitchburg  Road,  and  perhaps  a quarter  or  a third  of  the  cars; 
without  any  extensiAre  docks  or  wharves,  like  those  of  the  Fitch- 
burg; without  a quarter  of  a million  in  cattle-yards;  without  the 
large  amount  of  surplus  property  held  by  the  Fitchburg,  Avith- 
out  a mile  of  neAV  track  — is  brought  up  by  this  imaginary  capi- 
tal to  stand  on  the  same  footing  Avith  the  Vermont  and  Massa- 
chusetts and  the  Fitchburg  lines;  Avhile  its  actual  capital  is  but 
a trifle,  perhaps  two  or  three  hundred  thousand  dollars,  beyond 
its  debt,  and  it  stands  representing  really  an  excess  of  only  two 
or  three  hundred  thousand  dollars,  from  growth  in  value  beyond 
its  debt  as  reported  to  the  State. 

Such  are  our  objections  to  this  road,  which,  without  any 
adequate  capital,  within  eighteen  months,  came  forward  and 
proposed  to  purchase  the  tunnel  either  for  itself,  or  for  some 
one  who  stands  behind  it.  We  think  there  are  serious 
objections  to  consolidating  this  road  — a road  out  of  the 
State,  and  beyond  the  control  of  Massachusetts  — with  the 
Vermont  and  Massachusetts,  the  Fitchburg,  and  the  tunnel, 
to  make  a line  between  Boston  and  Troy,  while  the  objective 
point  is  upon  Lake  Ontario. 

These  are  the  suggestions  which  I have  to  make  in  reply  to 
what  has  been  said  in  favor  of  the  consolidation  of  the  Troy 
and  Boston  Road  in  the  enterprise  which  is  now  presented. 

Judge  Thomas.  — I understand  that  the  Fitchburg  Railroad 
is  opposed  to  any  consolidation  with  the  Troy  and  Boston. 

Mr.  Derby.  — We  prefer  to  have  the  consolidation  made 
with  Massachusetts  roads,  and  then  to  lease,  or  make  ar- 


9 


rangements  with,  the  Troy  and  Boston  Road.  We  are  opposed  . 
to  making  the  Troy  and  Boston  Road  the  basis  of  consolidation 
under  these  circumstances. 

Judge  Thomas.  — You  are  opposed  to  consolidating  with 
that  road  ? 

Mr.  Derby.  — My  preference  is  to  hire  that  road,  rather  than 
consolidate  with  it. 

Judge  Thomas.  — I speak  of  the  position  of  your  clients,  the 
Fitchburg  Road.  That  road  appears  here  to-day,  as  I under- 
stand it,  opposed  to  any  consolidation  with  the  Troy  and  Bos- 
ton Road. 

Mr.  Derby.  — Record  it  so,  if  you  please.  I believe  I am 
correct  in  so  saying.  I object  to  it. 

Judge  Thomas.  — The  road  objects? 

Mr.  Derby.  — Yes,  sir. 

5.  The  fifth  point  which  I propose  to  submit  to  this  commit- 
tee, and  through  them  to  the  State,  is  that  the  objective  point  to 
which  we  look  to-day  is  Oswego  upon,  Lake  Ontario,  with  its 
te^elevators,  having  a capacity  of  two  million^>/ bushels  ; with 
its  population  of  twenty  thousand;  with  water-mills  to  turn 
out  eight  thousand  barrels  of  flour  daily;  standing  as  it  does 
at  the  outlet  of  seven  lakes, — all  those  interior  lakes  of  New 
York, — with  probably  the  finest  water-power  on  this  continent, 
with  a hundred  feet  o/f  fall  from  those  seven  lakes  down  into 
Lake  Ontario;  being  to-day  the  terminus  of  a railway  that  will 
be  finished  by  August,  coming  down  from  Niagara  Falls,  along 
the  line  of  the  lakes,  upon  the  shore  of  the  lake, 

connecting  by  the  new  bridge  at  Queenstown  with  the  Great 
Western  and  Grand  Trunk  of  Canada,  with  the  Michigan  Cen- 
tral, and  so  with  Chicago, — Oswego,  I say,  is  our  objective  point. 
And  when  wre  get  that,  and  make  our  connection,  we  shorten 
the  journey  to  Chicago  more  than  a hundred  and  twenty  miles 
from  what  it  is  to  day  by  Cleveland  and  Toledo,  the  route  fol- 
lowed by  the  Vanderbilt  line  on  its  way  to  Chicago. 


10 


Mr.  Bates.  — How  do  you  get  the  distances?  Can  you  give 
it  in  detail  ? 

Mr.  Derby  — I will  put  it  in  evidence.  I have  not  the  figures 
on  this  brief,  which  is  a very  short  one. 

6.  I now  come  to  a suggestion  made  by  my  friend  Judge 
Thomas,  that  he  comes  here  to  favor  a continuous  independent 
line  to  the  West : that  I understand  to  be  his  statement. 

Judge  Thomas.  — I will  make  my  statement  when  the  time 
comes.  I have  not  opened  my  case  yet.  You  may  take  care 
of  yours,  and  I will  of  mine. 

Mr.  Derby.  — I will  refer,  then,  to  the  introduction  of  Judge 
Thomas.  I will  not  call  it  an  opening.  In  his  introduction,  he 
spoke  in  favor  of  a continuous  and  independent  line.  I sug- 
gest that  the  line  he  proposes  may  be  a continuous  one, 
but  is  not  an  independent  one;  and  that  is  all  I have  to  say  in 
answer  to  the  very  brief  and  happy  introduction  of  my  friend 
in  starting  this  case.  His  argument  was  a short  one : mine  is 
shorter. 

Judge  Thomas.  — I understand  that  the  Fitchburg  Road 
wants  a line  to  Oswego. 

Mr.  Derby.  — It  wants  an  independent  line,  and  one  of  its 
objective  points  is  Oswego;  and  it  comes  here  to  secure  both. 

I make  these  points,  and  will  not  attempt  to  strengthen  them. 
I leave  them  to  stand  on  their  merits.  I mean  to  be 
clear  as  a bell,  and  I believe  I have  stated  them  distinctly ; and 
at  any  rate  they  will  be  recorded,  and  the  committee  will  have 
an  opportunity  to  see  them. 

7.  I come  now  to  my  seventh  point,  which  meets  the  sugges- 
tion of  Mr.  Bates,  — that  consolidation  must  deal  with  direct  lines 
only.  His  idea  is,  the  State  is  divided  between  three  or  four 
lines,  and  that  we  are  to  deal  with  the  direct  lines  alone.  I 
have  not  heard  my  brother  cite  a single  statute,  or  a single  de- 
cision of  the  legislature  of  Massachusetts,  which  confines  us  to 
direct  lines.  The  consolidation  in  other  countries  has  been  on 


11 


a different  theory:  it  has  been  the  consolidation  of  lines  and 
branches.  We  shall  favor  here  the  consolidation  of  two  lines  in 
one  county,  Middlesex;  and  I cannot  understand  that  there  is 
any  thing  in  the  legislation  of  the  State  that  precludes  consoli- 
dation of  lines  parallel  to  each  other  for  a short  distance,  or 
which  run  in  the  same  county.  I repel  the  idea  that  we  are  con- 
fined in  consolidation  to  direct  lines.  That  is  my  brief  answer  to 
Mr.  Bates.  By  consolidating  other  lines,  great  waste  may  often 
be  avoided.  For  instance,  if  the  Fitchburg  Road  should  be  con- 
solidated with  other  lines  going  through  Middlesex  County,  a 
very  great  benefit  might  be  conferred,  — first  on  the  Fitchburg. 
Road,  by  having  added  to  its  resources  the  large  docks  and  ele- 
vators which  are  now  in  process  of  construction,  and  adapted  to 
the  through  business  of  the  West;  second  by  adding  to  the 
Boston  and  Lowell  Railroad  all  the  piers,  wharves,  and  water- 
front of  the  Fitchburg  Railroad. 

If  you  trace  each  mile  of  railroad  of  the  last  of  these  lines,  you 
will  find  three  or  four  miles  of  piers  and  wharves  adapted  to  the 
local  business  of  the  country.  The  union  of  the  piers  and  docks 
of  the  Fitchburg  Railroad  with  those  of  the  Boston  and  Lowell 
Railroad  will  accommodate  the  whole  interior  of  the  country,  in- 
cluding New  Hampshire  and  Vermont ; while  the  great  pier  of  the 
Boston  and  Lowell  Road,  and  its  extensive  docks,  and  the  spacious 
elevator  it  is  about  to  commence  in  a very  appropriate  spot, 
will  accommodate  not  only  the  upper  line  of  the  Fitchburg 
Road,  but  the  great  interior  traffic,  giving  facilities  in  which  the 
Fitchburg  Road  is  at  present  deficient.  I can  see  that  these  lines 
consolidated  will  be  of  great  benefit  to  each  other,  and  that  con- 
solidation will  save  a waste,  which  I think  may  be  estimated  as 
high  as  three  or  four  hundred  thousand  dollars  a year  in  their 
expenses.  By  combining  these  two  roads,  a wasteful  expendi- 
ture in  construction  also  will  be  avoided.  This  will  be  elucidated 
in  a case  subsequently  to  be  presented ; and  I will  but  allude  to 
it  to-day. 


12 


8.  I pass,  gentlemen,  from  that  point  to  the  eighth,  which  I 
propose  to  present  to  you,  — that  strong  companies,  with 
branches,  should  be  formed  to  do  the  business  of  our  State  and 
of  the  interior,  and  the  business  of  the  West.  Such  is  the  poli- 
cy of  Europe. 

First  in  Great  Britain.  And  I here  put  into  this  case  a mag- 
azine which  I hold  in  my  hand,  published  in  London,  Jan.  11, 
about  three  weeks  old,  and  which  gives  us  the  latest  informa- 
tion which  has  reached  this  country  upon  that  subject.  I shall 
submit  it  to  you  as  showing  the  consolidation  in  England,  not 
merely  of  lines  that  are  end  to  end,  but  lines  which  are  collate- 
ral, which  are  connected  with  each  other ; with  respect  to  which 
consolidation  will  allay  idle  and  useless  competition.  1 have  in 
my  hand  a list  of  ten  roads  consolidated  in  England,  one  of  them 
comprising  fifteen  hundred  miles,  which  has  pending  before  the 
parliament  of  Great  Britain  to-day  a plan  for  consolidating  with 
another  road,  which  has  five  hundred  miles  of  road  running 
nearly  at  right  angles.  One  is  the  old  London  and  Birmingham 
Road,  now  known  as  the  London  and  North-western,  which  with 
its  branches  embraces  fifteen  hundred  miles;  and  the  other 
the  Yorkshire  and  Lancashire  Road,  running  across  the  island 
with  many  branches.  It  is  proposed  to  consolidate  these  two 
roads ; and,  when  consolidated,  they  will  have  two  thousand 
miles  of  railroad,  — two  or  three  times  as  many  as  the  lines  will 
have  which  you  will  be  asked  to  consolidate. 

Here,  gentlemen,  are  ten  roads  set  forth  in  this  magazine  ; and 
they  comprise  eight  thousand  two  hundred  miles  of  railway. 
They  form  two-thirds  of  all  the  railroads  of  the  United  King- 
dom. They  have  originated  under  several  hundred  acts  of  par- 
liament with  different  charters;  they  have  been  melted  down 
into  ten,  averaging  eight  hundred  and  twenty  miles  of  main 
line  and  branches  consolidated  roads  ; and  I am  happy  to  say 
that  all,  or  nearly  all,  of  these  consolidated  lines  are  successful, 
while  many  of  the  roads  which  are  not  consolidated  are  the  re- 


verse.  It  has  proved  a successful  thing  in  England,  — successful 
in  allaying  wasteful  competition,  successful  in  cheapening  and 
expediting  transit.  It  has  accomplished  both  objects.  The 
conclusion  of  the  European  world,  as  I have  read  it  for  the  last 
thirty  years,  is,  that  the  competition  on  railroads  is  often  waste- 
ful ; that  consolidation  usually  brings  benefits,  while  competition 
tends  to  saddle  the  country  with  unnecessary  roads,  with  more 
than  it  requires,  the  interest  of  whose  cost  must  be  paid  by  the 
people  who  live  upon  their  borders. 

I have  given  you  the  consolidation  of  England.  In  this 
same  magazine  is  a list  of  six  or  eight  of  the  principal  railroads 
of  France ; and  one  of  them,  between  Paris  and  Lyons,  both 
across  through  the  country  on  either  side,  comprises  twenty- 
eight  hundred  miles  of  railroad,  — nearly  four  times  the  length  of 
France.  It  is  one  of  the  most  successful  roads  of  Europe, 
running  with  low  fares  and  low  freights ; and  the  others,  four 
or  five  in  number,  comprise  the  principal  railroads  of  France. 

The  same  thing  is  true  in  Italy  and  Austria.  The  policy  of 
the  European  world  is  towards  consolidation  on  a large  scale. 
That  is  the  policy  of  Europe ; and  I adduce  it  as  an  argument 
in  favor  of  a large  consolidation  here. 

Mr.  Chisholm,  (of  the  committee). — -You  say  that  you 
have  there  a list  of  the  consolidated  roads  in  England,  and 
that  one  of  them  has  a petition  before  parliament  for  consoli- 
dating with  another  road.  Is  it  not  the  fact  that  that  is  mak- 
ing quite  an  excitement  in  England,  and  that  they  are  investi- 
gating now  the  effect  of  consolidation  on  the  public  ? 

Mr.  Derby.  — They  are,  sir. 

Mr.  Chisholm.  — Is  the  testimony  contained  in  that  maga- 
zine, so  that  we  can  have  it  ? 

Mr.  Derby.  — I think  there  may  be  some  objections  to  consoli- 
dation ; but  I think  it  meets  with  very  great  favor.  And  I will 
say  that  the  plan  now  before  parliament  is  on  a larger  scale  than 
any  thing  yet  attempted.  It  is  taking  two  of  the  largest  roads 


.14 


of  England,  — one  with  fifteen  hundred  miles  of  track,  and  the 
other  with  five  hundred,  — and  putting  them  together  ; and  very 
likely  there  are  some  people  who  would  suggest  that  it  may  be 
impolitic  to  go  so  far.  It  may  be  in  my  power  to  place  this 
discussion  before  you. 

Mr.  Chisholm.  — My  point  is,  that,  if  that  is  the  case  in 
England,  we  ought  to  have  the  testimony  as  to  the  effect  of 
consolidation  and  competing  lines  in  England. 

Mr.  Derby.  — I will  state  on  that  point,  that  being  a con- 
stant reader  of  the  English  railway  magazines,  reading  them 
weekly,  I have  found  that  consolidation  meets  with  very  high 
favor.  Within  the  last  four  months,  I have  travelled  through 
England,  Ireland,  and  Scotland  ; and  I can  bear  testimony  to 
the  admirable  management  of  some  of  the  largest  roads.  I 
travelled  on  twenty ; and  I found  that  the  consolidated  roads 
were  the  best  managed,  the  most  punctual,  and  the  most  cor- 
rect in  their  mode  of  conducting  their  business. 

Mr.  Chisholm. — My  impression  was,  that  it  was  claimed,  that, 
while  it  was  beneficial  to  the  railroads,  it  was  not  so  beneficial 
to  the  public. 

Mr.  Derby.  — There  may  be  some  who  hold  that  opinion. 

Mr.  Bates. — Is  it  not  like  this,  that  there  are  two  claims 
in  reference  to  consolidation,  — one  relating  to  consolidation  for 
the  through  or  long  traffic,  which  is  for  the  benefit  of  the  peo- 
ple ; and  the  other  the  consolidation  of  competing  roads  to 
create  a monopoly?  I understand  that  these  two  classes  of 
consolidation  are  now  being  brought  up  in  parliament,  and  dif- 
ferent views  are  entertained ; almost  everybody  in  England 
favoring  the  consolidation  of  lines  in  the  interest  of  the  people, 
but  the  question  coming  up  very  strongly,  whether  it  is  advisa- 
ble to  consolidate  for  the  purpose  of  creating  a monopoly  and 
destroying  competition. 

Mr.  Derby.  — I think  the  evidence  is  the  other  way.  The 
evidence  is,  that  the  consolidation  of  roads  running  near  each 


15 


other  which  are  throwing  out  unnecessary  branches  is  most 
important.  I have  an  illustration  of  it  in  the  case  of  the  Lon- 
don and  Brighton  Road,  which  was  earning  four  or  five  per 
cent : but  competing  roads  were  chartered  on  each  side  of  it, 
which  obliged  it  to  make  branches  ; and  dividends  were  brought 
down  to  one  or  tvvo  per  cent,  and  the  road  seriously  injured. 
Rates  were  put  up  in  consequence  of  these  branches.  England 
had  occasion  to  regret  the  extent  to  which  she  had  gone  in 
competition.  Within  a short  time,  the  building  of  such  branch- 
es has  been  stopped,  and  the  London  and  Brighton  Road  has 
begun  to  reduce  its  prices ; but  they  stand  higher  than  upon 
continental  lines  with  which  the  London  and  Brighton  con-* 
nects,  where  this  system  of  competition  has  not  been  adopted. 

But  I will  give  you  an  illustration  nearer  home,  — the  case  of 
the  Eastern  and  Boston  and  Maine  Roads,  — which  has  recently 
occurred  in  the  State  of  Maine;  where,  in  consequence  of  a 
difference  as  to  the  use  of  a road  which  was  run  for  the  common 
benefit  of  both  for  many  years  from  Portsmouth  to  Portland, 
a wasteful  expenditure  has  been  made  of  three  or  four  millions 
to  make  a parallel  road  side  by  side  with  the  other;,  the  inter- 
est upon  which  must  become  a charge  upon  the  public.  This 
would  have  been  avoided  by  consolidation,  and  the  construc- 
tion of  a second  track,  if  the  business  had  required  it ; which 
I believe  was  not  the  case. 

I wish  to  state,  gentlemen,  in  this  connection,  that  the  policy 
in  Europe  is  decidedly  in  favor  of  consolidation  as  the  best 
mode  of  promoting  cheap  freights  and  cheap  fares. 

9.  I have  enlarged  upon  this  point,  more  than  I intended  to. 

I come  to  the  ninth  point:  that  it  is  important  to  have  a strong 
consolidation  here,  — one  strong  enough  to  carry  the  lines  of 
Massachusetts  forward  to  connect  with  those  of  Canada  and 
Michigan.  You  have  had  some  evidence  with  respect  to  them. 
There  are  two  or  three  roads  (perhaps  twenty  or  thirty  miles 
apart)  through  different  parts  of  Canada,  tending  towards  the 


same  point,  which  will  create  additional  business.  There  has 
been  on  the  Michigan  Central  a very  large  expenditure  in 
straightening  the  line,  and  furnishing  steel  rails  and  other 
improvements.  I think  the  expenditures  of  the  Michigan  Cen- 
tral within  eighteen  months  reach  five  or  six  millions;  and  its 
improvements  will  be  completed  during  the' present  year.  The 
Michigan  and  Canada  lines  are  virtually  Boston  lines.  The 
Great  Western  is  run  in  connection  with  the  Michigan  Central, 
and  under  the  guidance  of  Mr.  Joy.  The  Michigan  Central  is 
controlled  in  Boston,  has  its  offices  in  Court  Street,  and  its  treas- 
urer is  here.  To  connect  with  these  lines,  we  want  to  reach 
Lake  Ontario.  To  accomplish  this,  there  must  be  a stronger 
consolidation  than  that  which  is  presented  for  your  considera- 
tion; for  there  are  a hundred  and  thirty-eight  miles  of  rail- 
road yet  to  be  built  to  reach  Oswego. 

10.  My  tenth  point  is,  that  a strong  consolidation  is  essential 
to  the  success  of  the  tunnel.  The  Boston  and  Albany  Road 
carried  last  year,  according  to  its  reports,  two  millions  eight 
hundred  thousand  tons  of  freight,  a large  proportion  of  which 
crosses  the  mountains;  according  to  the  estimate  of  Mr.  Ap- 
pleton, fourteen  or  fifteen  hundred  thousand  tons.  For  many 
years,  the  whole  through  freight  carried  on  the  Boston  and 
Albany  Railroad,  then  known  as  “the  Western,”  was  not  more 
than  fifty  or  sixty  thousand  tons  a year;  for  fifteen  years  it  did 
not  exceed  one  hundred  thousand  tons  of  through  freight 
yearly.  It  has  now  wonderfully  increased,  under  the  influence 
of  low  prices  based  upon  steel  rails,  steel  tires  for  the  locomo- 
tives, second  tracks,  and  the  construction  of  suitable  depots  at 
the  terminus  here  : these  have  followed  consolidation.  The  de- 
pot of  the  Boston  and  Albany  line  at  East  Boston  is  six  miles 
beyond  our  depots ; but  by  the  improvements  which  the  Bos- 
ton and  Albany  line  has  made,  and  the  large  capital  which  it 
has  expended,  it  is  doing  this  large  business.  Now,  in  regard 
to  the  tunnel  : we  do  not  want  to  do  the  insignificant  business 


IT 


which  was  done  for  twenty  years  by  the  Boston  and. Albany 
Railroad.  We  want  to  begin  where  the  Boston  and  Albany 
has  left  off,  or  at  the  point  of  progress  which  it  has  reached. 
We  wish  to  attract,  if  possible,  two  millions  of  tons  of  freight 
from  the  West.  A very  small  toll  upon  this  amount  of  freight 
— a toll  no  larger  than  the  toll  which  is  charged  at  the  Albany 
bridge,  according  to  the  testimony  this  morning,  — twenty-five 
cents  per  ton  on  two  millions  tons  of  freight  (five  hundred  thou- 
sand dollars)  — will  pay  the  interest  upon  the  cost,  and  accu- 
mulated interest  on  the  tunnel. 

The  tunnel,  as  I understand  it,  will  have  cost  seven  millions 
of  dollars ; I mean  for  labor  expended  upon  it,  some  of  it, 
perhaps,  unwisely  applied.  The  accumulated  interest,  when 
the  tunnel  is  finished,  will  carry  its  cost  to  about  ten  or  eleven 
millions:  it  is  erroneously  stated  in  the  papers  at  thirteen. 
That  is  merely  an  assumption  ; but  the  interest  on  the  cost  will 
carry  it  above  ten  millions.  Now,  if  we  can,  by  energetic 
action,  attract  to  that  tunnel  a business  of  two  millions  of  tons 
(less  than  the  amount  of  freight  carried  upon  the  Boston  and 
Albany  line  to-day),  and  put  the  toll  down  to  twenty-five  cents 
a ton,  it  pays  the  interest  upon  the  cost  and  on  the  accumulated 
interest ; and  it  brings  about  a result  which  I have  most  ardent- 
ly desired  and  most  confidently  predicted, — that  the  State 
will  not  lose  in  the  construction  of  the  tunnel.  I venture  to 
predict,  that  if  you  will  carry  out  the  plan  which  will  be  pre- 
sented to  you,  which  will  furnish  the  capital  requisite  for  doing 
an  immense  business,  this  tunnel  will  soon  pay  the  five  per 
cent  or  less  interest  which  the  State  is  paying,  not  only  upon 
the  cost  of  the  tunnel,  but  upon  the  accumulated  interest. 

As  a man  representing  to-day  the  views  of  many  of  the  peo- 
ple of  the  Commonwealth,  I stand  upon  the  ground  that  the 
State  ought  not  to  part  with  its  interest  in  the  tunnel.  It  can 
hold  it  more  easily  than  any  one  else  at  four  and  one-half  to 
five  per  cent  interest. 

s 


18 


It  should  prescribe  a low  rate  of  toll  upon  it,  and  confide  it 
to  some  company  strong  enough  to  use  it  efficiently,  the  rate  of 
toll  to  be  diminished  as  the  business  increases;  thus  making  it 
for  the  interest  of  the  company  to  increase  the  business  as  fast 
as  possible.  It  should  be  required  to  carry  the  passengers  and 
freight  from  connecting  roads  at  the  same  toll  which  it  pays 
for  its  own  business,  with  a fair  rate  for  haulage,  — say  two  cents 
per  ton,  and  passenger  per  mile,  with  a moderate  charge  for 
marshalling  trains  at  the  junctions.  It  should  give  connecting 
roads  every  incentive  to  exertion,  and  give  the  company  which 
will  run  the  line  from  Boston  up  to  the  tunnel  the  power  to 
carry  the  business  through.  It  will  be  best  to  have  this  done 
by  one  company  (that  I concede),  and  it  should  be  done  by 
the  line  which  has  kept  the  communication  open  for  years;  but 
it  must  be  strong  enough,  and  have  capital  enough,  to  do  it 
well,  and  do  it  immediately,  not  lingering  by  the  way,  or  form- 
ing a partnership  with  the  tunnel,  and  then  using  it  to  build  up 
a weak  credit.  We  would  not  have  the  tunnel  put  into  the 
market  to  go  into  the  hands  of  stock-jobbers  and  speculators. 
We  want  it  held  by  the  State,  so  that  the  State  can  fix  the 
rates  of  freight,  and  prescribe  that  the  parties  running  it  shall 
take  the  freight  of  the  connecting  roads  at  moderate  specific 
rates.  That,  gentlemen,  is  the  solution  which  I present  to  you 
of  the  question,  “What  will  you  do  with  it?”  — a question 
so  well  discussed  in  Blackwood  by  the  illustrious  dead. 

Adjourned  to  Thursday  at  ten  and  a half. 

Thursday,  Feb.  6,  1873. 

The  hearing  was  resumed  at  ten  and  a half  o’clock  ; and  Mr. 
Derby  continued  his  remarks. 

Mr.  Derby.  — I am  happy  to  meet  you,  gentlemen,  afresh 
this  morning,  and  to  finish  the  argument  of  yesterday. 

I respond  first  to  the  call  from  my  friend  Mr.  Bates,  who 
desired  the  distances.  The  distance  from  Boston  to  Chicago  by 


19 


the  new  route  is  920  miles  against  1,042  via  Toledo,  showing  a 
saving  of  122  miles  as  compared  with  the  Toledo  and  Cleve- 
land route,  and  the  Boston  and  Albany  route,  along  the  south- 
ern side  of  Lake  Erie.  This  line  is  through  Canada. 

Mr.  Bates.  — What  I wanted  was  how  you  made  it  up. 

Mr.  Derby.  — Here  it  is  in  the  sheet.  I will  put  it  into  the 
case.  I also  put  into  the  case,  Mr.  Chairman,  a letter  from  Mr. 
James  F.  Joy,  dated  March  25,  1872.  Mr.  Joy  is  the  president 
of  the  Michigan  Central  Road,  and  runs  his  line  in  connection 
with  the  Great  Western  Railroad  of  Canada;  and  in  this  letter 
he  gives  the  distances  through  Canada,  and  upon  the  Michigan 
Central;  and  he  gives  them  as  I stated  them  yesterday.  I will 
not  detain  you  by  reading  the  letter;  but  he  makes  the  distances 
in  Canada  and  on  the  Michigan  Central  447  miles.  I have 
here  his  letter  giving  the  distances,  which  I believe  is  per- 
fectly reliable.  He  expresses  the  warmest  sympathy  with 
this  enterprise,  and  a strong  hope  that  the  independent  line 
will  succeed. 

Mr.  Thomas.  — What  line  do  you  mean  ? 

Mr.  Derby.  — An  independent  line  by  the  way  of  the  tun- 
nel, along  the  shore  of  Lake  Ontario  and  across  Canada. 

The  Chairmans  — You  stated  yesterday  that  the  difference 
in  favor  of  the  new  line  was  140  miles.  You  correct  that  now  ? 

Mr.  Derby.  — If  I was  understood  to  say  so,  I was  misunder- 
stood. It  was  128  miles.  I add  to  the  122  miles  the  saving 
of  the  distance  between  Boston  and  East  Boston,  which  is  six 
miles ; the  freight  depots  of  the  Boston  and  Albany  Railroad 
being  at  East  Boston,  six  miles  from  the  terminus  which  we 
propose,  on  the  Charlestown  shore.* 


* The  distance  given  by  Mr.  Joy  in  his  letter  was  447  miles  from  Lewiston  to 
Chicago.  It  has  been  suggested  to  me  by  Mr.  Appleton,  that,  in  this  letter,  the 
figures  4 and  7 may  have  possibly  been  transposed.  If  so,  the  distance  would  be 
474,  in  place  of  447  miles.  In  such  case,  the  saving  would  be  101  miles,  in  place 
of  128,  — a very  material  saving  in  either  case. 


20 


I now  put  into  the  case  the  Inst  two  reports  of  the  Michigan 
Central  Railroad  Company.  I have  marked  the  passages  to 
which  I refer;  and,  as  time  is  valuable,  I will  not  stop  to  read 
them,  but  will  state  the  substance.  The  Michigan  Central 
Railroad  Company,  which  had  been  carrying  yearly  some  six  or 
eight  hundred  thousand  tons  of  freight,  found  themselves  sud- 
denly called  upon  last  year  to  carry  more  than  a million  of 
tons.  The  result  was,  that  in  mid-winter  they  were  obliged  to 
take  up  their  rails  for  thirty-five  miles,  at  great  inconvenience 
and  expense ; they  have  been  obliged  to  lay  down  sixteen  thou- 
sand tons  of  steel  rails,  to  renew  their  track,  and  put  down  a 
second  track;  they  have  been  obliged  to  add  several  thousand 
cars,  and  have  increased  their  number  to  four  thousand.  This 
is  an  important  lesson  for  us  upon  this  line.  They  have  also 
purchased  fifty-seven  locomotives ; they  have  determined  to 
equip  the  road,  and  provide  it  with  cars  and  engines  sufficient  to 
do  the  business  which  is  crowded  upon  them ; and  they  say 
that  the  effect  of  not  being  ready  for  the  business  has  increased 
their  expenses  from  sixty  to  seventy  per  cent.  They  apologize 
to  their  stockholders  for  reducing  then'  dividends  from  ten  to 
eight  per  cent,  because  this  rush  of  business  has  come  upon 
them,  and  increased  their  expenses,  and  diminished  their  profits, 
as  they  had  not  the  means  to  do  the  business  successfully. 

11.  I come  now  to  my  eleventh  point,  which  is,  that  our 
line,  in  order  to  succeed,  must  have  steel  rails,  and  must  have  a 
second  track.  We  have  a double  track  from  Boston  to  Fitch- 
burg ; but  from  Fitchburg  onward,  and  eventually  to  the  Lake, 
we  shall  require  a double  track,  with  steel  rails  from  end  to  end ; 
and  to  purchase  these  (I  leave  you  to  make  the  computation  : 
I have  made  it)  calls  for  four  millions  of  dollars  for  the  double 
track  and  the  steel  rails.  To  do  the  business  which  is  now 
done  upon  the  Boston  and  Albany  line,  we  shall  require  forty- 
two  hundred  cars,  and  engines  sufficient  to  set  these  cars  in 
motion.  On  the  Boston  and  Albany  line,  they  reported,  a year 


21 


ago  (I  have  not  yet  received  the  report  for  the  past  year),  that 
they  had  in  the  vicinity  of  four  thousand  cars,  which  I under- 
stand have  been  increased  to  over  four  thousand  during  the 
last  year,  and  they  were  doing  a business  of  two  million  eight 
hundred  thousand  tons.  To  do  a business  of  three  million 
tons,  which  I hope  we  may  do  upon  the  tunnel  line,  demands 
over  four  thousand  cars,  and  demands  more  than  fifty  heavy 
engines.  To  purchase  these,  four  millions  of  dollars  will  be  re- 
quired. 

Then,  to  construct  the  railroad  in  New  York,  there  will  be 
required  for  the  128  miles  at  least  four  millions  of  dollars. 
Now,  I am  not  going  to  suggest  .that  the  consolidated  line  alone 
will  build  that  road;  but  I do  suggest  that  capital  is  needed  for 
that  road  ; and  we  want  a road  strong  enough  to  encourage  it, 
possibly  to  take  a lease  of  it,  to  give  it  a lift  in  some  way.  To 
do  that,  a large  amount  of  capital  is  required.  I presume,  when 
that  road  is  built,  the  contractors  will  take  part  of  the  stock ; 
that  part  of  the  cost  may  be  provided  for  by  bonds ; that  part 
may  be  taken  by  the  Michigan  Central;  that  part  may  be  taken 
in  Canada,  by  the  Great  Western  Road,  part  by  the  new  line 
along  Lake  Ontario,  now  nearly  done,  which  regards  this  as  a 
feeder  and  an  important  line.  But  some  one  must  have  funds 
to  set  it  in  motion;  and  I submit  that  there  is  something  like 
four  millions  of  capital  required. 

This  suggestion  with  regard  to  equipage,  the  suggestion  as  to 
rails,  and  the  suggestion  with  regard  to  the  additional  road  in 
New  York,  make  three  points,  — the  11th,  12th,  and  13th. 

14.  I make  another  point,  that  this  line  calls  for  elevators : 
it  calls  for  steamboat  docks.  The  freight  will  not  come 
unless  you  have  the  means,  to  send  it  beyond  Boston.  Pro- 
visions are  wanted  in  Europe.  The  demand  is  increasing. 
The  artisans  of  Europe  have  begun  to  eat  meat.  They  formerly 
lived  on  bread  and  cheese,  and  very  often  dispensed  with  the 
latter.  But  since  the  rise  in  wages,  the  effects  of  which  I no- 


22 


ticed  while  travelling  in  Europe  the  past  summer,  an  immense 
demand  has  sprung  up  for  provisions,  prices  have  risen;  and  we 
want  the  facilities  to  move  these  provisions  across  the  ocean.  It 
is  undoubtedly  the  policy  of  our  country  to  provide  ships ; but, 
until  it  does  legislate  in  their  favor,  we  must  take  the  ships  of 
other  nations,  that  can  furnish  them  on  the  basis  of  a low  rate 
of  interest,  and  a low  price  for  iron.  The  time  will  come  when 
we  shall  furnish  them  ourselves ; but  we  cannot  get  either  for- 
eign or  domestic  ships  unless  we  have  the  docks  to  receive  them. 
There  must  be  provided  spacious  docks,  spacious  elevators,  to 
load  the  ships,  and  piers  and  sheds  to  receive  their  cargoes.  Be- 
fore we  can  attract  freight  from  the  West,  these  elevators  must  be 
provided.  I believe  it  costs  fifty  cents  a bushel  to  provide  an 
elevator,  and  as  much  more  to  provide  docks  and  piers,  — some- 
thing like  a dollar  a bushel.  If  we  transport  a million  bushels 
every  fortnight,  we  require  a million  of  dollars  for  this  purpose : 
if  we  carry  two  millions  of  bushels,  we  require  two  millions  of 
dollars. 

To  attract  this  business  of  the  West,  there  must  be  expended 
thirteen  millions  of  dollars.  It  must  be  done  gradually,  eco- 
nomically ; but  the  money  must  be  had : and  the  question  will  ad- 
dress itself  to  you,  gentlemen  of  the  committee,  whether  this  con- 
solidation which  is  proposed,  of  a weak  road  in  Massachusetts 
and  Vermont,  and  a still  weaker  one  in  another  State,  can  furnish 
the  requisite  capital. 

15.  Now,  gentlemen,  I submit  to  you,  as  my  fifteenth  point, 
that  the  consolidation  of  the  Vermont  and  Massachusetts  and 
the  Troy  and  Boston  Roads  will  not  furnish  thirteen  millions  of 
dollars.  The  New- York  Road  has  cost  less  than  the  debt  upon 
it,  according  to  the  evidence  in  this  case,  to  which  I refer  to  you, 
striking  out  what  is  put  down  for  engineering  and  agencies  (four 
hundred  thousand  dollars),  which  is  a fanciful  charge,  covering  the 
sacrifices  made  on  the  bonds,  and  every  thing  of  that  character. 
Its  value  consists  in  the  rise  in  prices,  if  there  has  been  any,  — 


simply  in  the  rise  in  value  beyond  the  debt.  The  original  invest- 
ment was  but  five  or  six  hundred  thousand  dollars  beyond  the 
debt;  and  for  many  years  the  road  did  not  pay  interest  upon  its 
debt. 

The  Troy  and  Boston  Road,  gentlemen,  brings  no  strength  to 
this  consolidation ; it  is  not  good  for  half  a million  additional 
capital.  And  the  Vermont  and  Massachusetts  Road,  a stronger 
road  than  the  Troy  and  Boston,  a very  valuable  road  directly  on 
the  line  which,  at  all  events,  must  be  adopted,  — the  Vermont 
and  Massachusetts  has  not  the  capital  adequate  to  carry  on 
these  improvements.  I wish  to  speak  of  it  with  the  utmost 
kindness.  I regard  it  almost  as  one  of  my  children,  having  in- 
voked the  legislature  to  grant  it  a charter.  But  I say  it  has  not 
the  requisite  capital.  It  has  a debt  of  seven  hundred  thou- 
sand dollars ; and  the  value  of  its  stock,  beyond  the  debt,  is 
not  over  one  or  two  millions.  It  has  not  the  requisite 
basis  to  raise  the  capital  for  this  great  undertaking.  For 
five  years  past,  its  dividends  have  been  one  and  a half  per 
cent  on  the  average ; and  that  would  represent  the  inter- 
est on  a very  moderate  capital,  less  than  a million ; and 
that  is  all  the  basis  upon  which  it  stands.  When  you  have  con- 
solidated the  two  lines  together,  without  the  Fitchburg,  you 
have  consolidated,  perhaps,  a million  and  a half  of  capital.  There 
it  is,  gentlemen,  called  upon  to  provide  the  greater  part  of  thir- 
teen millions  of  dollars.  Can  it  do  it?  Has  it  the  power  to  do 
it?  And  do  you  wonder  that  it  should  put  its  arms  around  the 
Fitchburg  Road,  and  try  to  embrace  it,  when  that  road  is  free 
from  debt,  and  has  a capital,  which,  with  its  increments,  must  be 
considered  seven  millions  of  dollars  at  least,  and  possibly  eight? 
Without  the  Fitchburg  Road,  there  is  insufficient  capital ; with 
the  Fitchburg  Road,  there  is  insufficient  capital.  More  capital 
is  required  to  carry  on  this  enterprise,  and  that  capital  must  be 
sought  somewhere  else. 

16.  My  sixteenth  point  is,  that  a larger  consolidation  is  re- 


24 


quired  than  the  one  which  is  suggested  in  order  to  provide 
additional  means. 

Now,  gentlemen,  if  an  association  can  be  formed  of  two  impor- 
tant trunk  lines  of  Massachusetts  in  Middlesex  County, — and  I 
will  not  go  into  any  details  about  it,  because  that  case  is  not 
now  before  this  committee  — I will  suggest  to  you  how  savings 
will  be  effected,  and  how  capital  will  be  found. 

There  will  be  a saving  in  annual  expenses  of  nearly 
four  hundred  thousand  dollars  in  conducting  the  business 
of  three  lines.  Any  gentleman  who  is  conversant  with 
railroads  will  know  the  fact,  that,  by  putting  these  lines 
together,  the  expenses  will  be  greatly  reduced ; and  my 
position  is,  that,  when  the  two  or  three  important  lines 
which  we  may  hope  will  form  the  basis  of  this  enterprise  are  as- 
sociated with  the  Vermont  and  Massachusetts,  there  will  be  an 
annual  saving  of  from  three  hundred  and  fifty  thousand  to  four 
hundred  thousand  dollars. 

You  will  see  by  the  report  of  the  Boston  and  Albany  Railroad 
for  the  last  year,  that  the  small  elevator  at  East  Boston,  with  its 
inferior  docks,  has  yielded  a hundred  and  ninety  thousand  dol- 
lars. When  a large  elevator  is  built  by  our  lines,  it  becomes 
immediately  and  directly  a source  of  revenue  ; and  it  will  proba- 
bly add  two  or  three  hundred  thousand  dollars  a year  to  the 
revenue  of  the  companies,  which  will  strengthen  the  consoli- 
dation. 

17.  Then  comes  in  the  revenue  to  be  derived  from  the  equi- 
page. If  millions  are  invested  in  cars  (for  I take  it  you  may 
rate  each  car  at  a thousand  dollars,  if  you  include  the  portion 
of  engine  that  goes  with  it),  four  millions  in  cars,  will  pro- 
duce eight  or  ten  per  cent,  making  a return  of  three  to  four 
hundred  thousand  dollars  a year,  independent  of  the  business. 
The  cars  will  find  employment  if  they  are  put  on  this  line, 
and  will  earn  money.  They  will  earn  it  somewhere.  But, 
with  this  equipage  added,  the  associated  lines  will  add  to  their 


25 


receipts.  If  you  associate  lines  whose  property  is  worth  to-day 
ten  or  fifteen  millions  of  dollars,  and  they  put  additional  capi- 
tal into  equipage,  second  tracks,  and  steel  rails,  — which  cheapen 
business  greatly ; for  a steel  rail  outlasts  twenty  iron  rails,  — 
they  will  be  strong  enough  to  carry  on  this  enterprise,  which 
the  Vermont  and  Massachusetts  line,  and  its  distant  and  feeble 
partner,  would  be  unable  to  carry.  This  is  my  position  with 
regard  to  the  association  of  these  lines. 

18.  The  next  point,  gentlemen,  which  I wish  to  present  to 
you  is,  that  the  plan  before  you  is  defective  in  this  respect,  — 
that  it  calls  on  one  of  the  lines  to  be  associated  to  resign  its 
dividends.  You  heard  the  testimony  of  Mr.  Richardson.  He 
gave  you  to  understand,  that,  for  two  or  three  years  to  come, 
the  Fitchburg  Road  might  possibly  lose  its  dividends : at  all 
events,  they  would  be  jeopardized. 

Mr.  Bates.  — I did  not  so  understand  him. 

Mr.  Derby.  — I refer  you  to  the  evidence.  There  was  a 
risk,  a peril  to  be  incurred.  He  declined  to  have  the  Fitchburg 
Road  guaranteed  any  dividends  during  the  time.  Although 
it  was  earning  eight  per  cent  from  its  local  business,  it  was 
to  be  required  to  come  forward  and  form  this  association, 
at  the  risk,  certainly,  of  losing  its  dividends  for  a time.  Well, 
gentlemen,  the  association  would  be  a union  of  a living  capital 
with  a dead  capital,  and  the  association  would  be  something 
like  this:  Two  young  men,  energetic  and  spirited,  go  to  a 
capitalist  engaged  in  a good  business,  receiving  dividends 
upon  his  property  invested,  and  say  to  him,  “We  wish  to 
go  into  partnership  with  you.”  — “What  funds  have  you?” 
— “We  haven’t  enough  to  go  to  market  with:  but  we  have 
energy,  spirit,  pluck ; and  we  wish  to  associate  ourselves  with 
you.  You  have  plenty  of  money  in  your  pocket ; you  have 
enough  capital:  and  we  propose  to  bring  in  our  old  uncle,  who 
has  a large  amount  of  real  estate.  We  propose  to  bring  him 
into  the  partnership  ; and  perhaps  he  will  mortgage  his  property, 

4 


or  let  us  pledge  it  for  him,  to  carry  on  the  concern.”' — “But, 
meanwhile,  what  am  I to  live  upon  ? How  am  I to  provide  for 
my  wife  and  children  ?”  This  is  the  view  I take  of  this  plan. 
The  dead  capital  of  the  tunnel,  still  dead  capital,  — a tunnel 
yet  to  be  finished,  yet  to  be  tested,  — and  these  two  roads 
(the  Troy  and  Boston,  and  Vermont  and  Massachusetts),  with 
little  or  no  capital,  are  to  be  associated  with  the  living  Fitch- 
burg Road ; and  thus  this  enterprise  is  to  be  carried  on.  Why, 
gentlemen,  when,  dreaming  of  this  subject,  it  presented  it- 
self in  my  visions  thus:  I was  in  a country  dairy,  and  was 
looking  at  the  shelves,  and  saw  three  pans  ; one  had  cream,  an- 
other milk,  and  the  other  buttermilk  or  skimmed  milk ; and  it 
was  proposed  to  the  dairy- woman  to  amalgamate  them  all; 
and  then  the  question  was,  how  the  owners  of  those  pans  were 
to  divide  the  butter,  and  which  would  produce  it.  That  is  the 
kind  of  association  suggested  by  the  gentlemen,  in  the  bill  upon 
which  I have  the  honor  to  address  you  this  morning. 

19.  Now,  gentlemen,  I come  before  you  with  the  experience 
of  thirty-four  years,  during  which  I have  been  either  a director 
of,  or  counsel  of,  railroads.  I am  not  now  a director  of  the 
Fitchburg  Railroad,  as  one  of  the  reporters  suggested ; for  I 
retired  eighteen  years  since.  As  soon  as  the  tunnel  line  was 
secured,  I ceased  to  be  a director ; and  the  result  at  which  I have 
arrived  is,  that  you  want  these  improvements  immediately;  you 
want  prompt  and  efficient  action.  These  are  not  to  be  secured 
by  harnessing  together  two  weak  companies  in  different  States, 
but  by  uniting  in  the  bands  of  wedlock  two  strong  ones,  who  are 
competent  to  go  forward  with  reproductive  power.  You  want 
the  steamships  at  once ; you  want  the  steel  rails  and  the  double 
tracks  immediately.  But  one  million  tons  additional  business 
yearly  can  be  done  without  them ; but  you  want  several  millions 
of  tons  at  once,  and  you  want  an  annual  increase.  You  must 
secure  immediate  results  by  bringing  in  capital.  You  want  the 
British  steamships,  and  you  must  be  ready  to  receive  them. 


27 


They  are  ready  to  come,  but  they  want  the  facilities,  and  these 
facilities  must  be  accorded ; without  them  you  will  not  have 
the  steamships. 

20.  You  want,  also,  immediate  returns  upon  the  capital  em- 
barked in  the  tunnel.  I look  on  that  as  a source  of  revenue. 
I have  faith  in  the  tunnel,  and  ever  have  had:  I have  not  fal- 
tered in  thirty-four  years  since  I took  up  the  idea.  But,  gen- 
tlemen, how  is  the  tunnel  to  pay,  unless  freight  comes’  to  it? 
You  have  opened  the  portals  of  New  York;  but  it  will  not  do 
for  Massachusetts  to  stand  there  idle.  You  must  go  beyond 
the  portals,  and  see  that  access  is  open  to  it  there,  and  facilities 
accorded : if  not,  you  will  wait  in  vain. 

On  that  point  let  me  make  one  or  two  suggestions.  Let  me 
look  at  things  as  they  are.  We  have  the  Boston  and  Albany 
line,  terminating  at  Albany,  and  there  connecting  with  a rail- 
road which  runs  to  Buffalo,  — the  New-York  Central  line. 
That  line  has  in  common  with  the  Boston  and  Albany  the 
twenty-three  miles  of  road  down  to  Chatham,  and  it  has  a com- 
mon interest  in  the  bridges.  I do  not  know  how  much  the  Bos- 
ton and  Albany  Road  gets  from  them ; but,  from  its  toll  on  the 
millions  of  tons  crossing  the  bridges,  some  one  is  realizing  a very 
large  return.  Twenty-five  cents  on  a passenger,  thirty-seven 
cents  or  more  per  ton  for  freight,  must  yield  a large  revenue,  per- 
haps fifty  per  cent.  I do  not  know  what  the  dividends  are.  I 
do  not  think  they  are  disclosed  in  any  of  the  reports  made  to 
the  State ; but  some  one  is  making  very  great  profit  upon  those 
bridges. 

I presume  Mr.  Chapin  and  Mr.  Vanderbilt  have  a large 
interest,  direct,  or  indirect  through  the  railroads  in  those 
bridges;  and  there  is  a very  strong  inducement  for  them  to 
send  freight  over  them  and  down  over  the  Harlem  Road  to 
Chatham,  or  down  the  Hudson-river  Road  to  New  York.  And 
when  your  line  is  finished  to  the  portals  of  New  York,  and  you 
call  for  freight  to  come  over  it,  you  will  doubtless  find  all  the 


energies  of  Vanderbilt  and  Chapin  applied  to  draw  the  freight 
another  way.  Can  you  expect  a#  liberal  patronage  from  them 
when  their  interests  are  in  the  opposite  direction  ? I submit  to 
you,  that  more  than  half  of  the  business  of  this  line  must  be 
drawn  from  Oswego  and  lines  beyond  it.  Oswego  has  elevators 
and  granaries,  now  depressed  because  Buffalo  is  favored  at  the 
expense  of  Oswego.  They  stand  there  with  their  arms  open, 
ready  to  receive  you ; and  you  must  push  your  line  as  directly 
and  quickly  as  possible  to  the  Lake  at  Oswego,  which  is  strong 
in  coal,  salt,  and  iron,  to  give  return  loads  to  the  propellers. 
With  two  millions  returns  of  tons  of  freight  (without  a passen- 
ger) at  twenty-five  cents  a ton,  the  tunnel  can  earn  half  a mil- 
lion of  dollars  a year,  or  five  per  cent  upon  the  whole  investment 
of  the  State,  principal  and  interest.  My  idea  is,  that  you  should 
have  that  amount  of  freight  within  two  years  after  the  tunnel 
is  finished  ; and  my  idea  is,  that  there  should  be  an  annual  increase 
of  half  a million  of  tons  or  more  for  many  years  to  come;  and 
that  the  toll  of  the  State,  beginning  with  a quarter  of  a dollar, 
should  be  gradually  reduced  to  some  almost  infinitesimal  point, 
for  the  encouragement  of  the  commerce  of  Massachusetts,  for 
that  was  the  object  for  which  the  tunnel  was  made.  If  the  idea 
of  the  friends  of  the  tunnel  was,  that  we  should  go  on  as  the 
Western  Railroad  did  for  twenty  years  before  they  got  one  hun- 
dred thousand  tons  of  through  freight,  it  was  not  my  idea.  It 
was  not  for  that  I devoted  time,  thought,  and  labor,  and  what- 
ever ability  I might  possess,  to  secure  the  aid  of  the  State  in 
its  construction.  I advocated  the  tunnel  as  a great  commercial 
and  financial  measure;  and  I want  it  to  result  in  benefit  to  the 
State  of  Massachusetts.  I wish  it  to  be  a blessing  to  the  State; 
and  then  I shall  feel  a pride  in  having  my  name  associated  with 
it  from  the  beginning  to  the  end.  I should  take  pride  in  the  fact 
that  I stood  by  it  in  its  weakness ; that  I went  to  Montreal  and 
found  the  Stanleys;  that  I introduced  them  to  the  work  as  men 
competent  to  complete  it,  and  thus  hastened  its  completion  ; 


29 


that  I for  two  years  invoked  the  State  to  furnish  the  two  million 
loan,  and  with  little  hope  of  reward. 

I shall  feel  a great  pride  in  the  success  of  this  enterprise,  and 
in  its  brilliant  results  to  the  State,  which,  I venture  here  to  pre- 
dict, will  be  achieved  through  the  aid  of  your  committee. 

21.  The  twenty-first  point  which  I present  to  you  is  this: 
that  it  is  not  safe  to  commit  this  tunnel  to  two  foreign  corpora- 
tions;  the  one  entirely  in  New  York  at  the  outlet  of  the  Cen- 
tral Road,  the  other  partly  in  Massachusetts,  and  partly  in 
Vermont,  holding  its  property  with  a feeble  hand.  A million 
dollars  might  control  the  stock  of  the  Vermont  and  Massachu- 
setts Road.  The  Troy  and  Boston  Road  is  controlled  already 
in  the  State  of  New  York  : put  them  together,  bring  the  Troy 
and  Boston  with  its  three  directors  into  the  same  interest  with 
the  Vermont  and  Massachusetts  with  its  three  directors  here, 
the  Fitchburg  Railroad  standing  out,  and  you  make  the  tunnel 
virtually  a foreign  enterprise,  — an  enterprise  out  of  the  State. 
I have  entire  confidence  in  my  friend  Mr.  Richardson ; but  he 
may  not  permanently  hold  his  place.  There  may  be,  at  some 
meeting  of  the  stockholders,  a preponderating  interest  in  favor 
of  New  York,  other  directors  may  be  chosen;  and  then  the 
whole  tunnel  enterprise,  if  you  confide  it  to  these  two  compa- 
nies, becomes  a New-York  enterprise,  a foreign  enterprise. 
This  tunnel  is  of  too  great  importance  to  the  State  of  Massa- 
chusetts to  be  confided  to  any  companies  the  stock  and  prop- 
erty of  which  are  held  to  a great  extent  under  other  States. 

22.  But  time  is  passing;  and  I pass  to  the  next  point,  that, 
if  you  part  with  the  tunnel  at  all  (and  I think  you  should 
hesitate  to  do  so),  you  should  intrust  it  to  strong  com- 
panies, which  are  at  home,  in  the  State  of  Massachusetts. 
Then  you  have  a strong  local  interest  in  the  tunnel ; then 
you  have  our  capitalists  enlisted  more  or  less  in  the  suc- 
cess of  an  enterprise  identified  with  the  prosperity  of  Bos- 
ton and  the  prosperity  of  the  State.  If  you  should  give 


30 


this  consolidation  to  two  of  our  strong  companies  on  the  sea- 
board, how  easy  it  would  be  for  them  to  hire  the  Vermont 
and  Massachusetts!  They  could  afford  to  pay  a fair  interest : 
they  could  afford  to  give  it,  I think,  more  than  it  would  earn 
itself;  or  they  might  agree  to  run  it,  and  share  pro  rata , to  put 
on  the  engines,  furnish  the  equipage,  furnish  a second  track,  and 
run  it  under  a long  lease.  There  are  many  ways  in  which  this 
thing  is  done  to-day.  The  Great  Western  Road,  I understand, 
is  run  in  connection  with  the  Michigan  Central.  Many  roads 
are  certainly  run  by  connecting  lines,  and  the  income  shared 
'prorata.  Thus  you  have  the  advantages  of  a long  line ; and 
each  road  retains  its  local  interests  and  its  local  business. 

Should  the  Fitchburg  Road  and  any  associated  road  propose 
to  the  Vermont  and  Massachusetts  that  they  would  run  up  to 
the  Troy  and  Greenfield  line,  there  would  be  but  one  objection 
made  that  occurs  to  me ; and  that  is  one  which  is  certainly  to  the 
honor  of  the  Fitchburg  Road,  — that,  thus  far  in  the  division  of 
the  business,  the  Vermont  and  Massachusetts  Railroad  Company 
have  had  more  than  their  pro  rata  share.  That  is  the  way  they 
have  been  treated.  I was  in  the  direction  of  the  Western  Rail- 
road when  that  road  and  the  Boston  and  Worcester  were  in 
controversy;  and  the  difficulty  then  was  to  get  for  the  costly 
Western  a pro  rata  share.  The  Boston  and  Worcester  held  to 
the  idea  of  very  high  charges:  the  Western  held  to  low  charges 
in  a more  difficult  country ; and,  when  they  came  to  divide,  the 
Boston  and  Worcester  Road  actually  claimed  the  lion’s  share  of 
the  joint  business.  Such  has  not  been  the  dealing  of  the  Fitch- 
burg Road  with  the  Vermont  and  Massachusetts.  You  observed 
how  kindly  Mr.  Richardson  spoke  of  the  treatment  they  had 
received  from  the  Fitchburg  Railroad.  They  have  had  more 
than  their  share,  — a very  liberal  allowance  of  the  receipts.  I 
know  of  no  objection  to  running  the  Vermont  and  Massachu- 
setts by  the  Fitchburg,  except  this,  — that  a pro  rata  would  not 
give  them  as  much  as  they  have  been  accustomed  to  receive. 


31 


Then  the  Fitchburg  Road,  according  to  the  evidence,  has 
made  offers  and  propositions.  Were  they  unreasonable?  It 
was  not  willing  to  consolidate  with  the  line  leading  down  to 
New  York,  but  was  willing  to  consolidate  with  the  Vermont 
and  Massachusetts  on  reasonable  terms.  All  it  asked  was,  that 
it  should  not  be  stripped  of  its  local  revenues ; for  would  it  be 
just  that  it  should  lose  its  income  of  eight  per  cent  by  going 
into  an  association  in  which  it  would  furnish  nearly  all  the  capi- 
tal ? Should  not  the  returns  now  received  from  the  local  busi- 
ness be  protected  ? Was  there  any  thing  unfair  or  unreasonable 
in  the  Fitchburg  saying  to  the  Vermont  and  Massachusetts, 
“We  are  willing  to  consolidate  wi.th  you,  on  condition  that  we 
have  our  eight  per  cent  dividend  pieserved  to  us”? 

Mr.  Bates.  — Upon  what  capital? 

Mr.  Derby.  — They  offered  it,  as  I understand,  upon  four 
millions;  although  their  capital  is  really  seven  millions,  or 
more. 

Mr.  Bates.  — There  would  be  no  objection  on  the  part  of 
the  Vermont  and  Massachusetts,  if  the  State  chooses.  We  are 
perfectly  willing  to  allow  it. 

Mr.  Derby.  — I will  have  that  suggestion  communicated  to 
my  clients.  But  I wish  to  say  that  this  was  a proposition  or 
suggestion  by  a committee  : it  was  not  submitted  to  the  direc- 
tors or  stockholders  of  the  Fitchburg  Road ; but  the  proposi- 
tion was  declined  at  once,  as  I understand,  by  the  Vermont  and 
Massachusetts. 

Mr.  Bates.  — On  public  grounds. 

Mr.  Derby.  — Any  way  it  was  put,  it  would  have  been  a fair 
proposition.  If  the  eight  per  cent  was  put  upon  four  millions, 
and  was  declined,  that  proposition  was  a most  liberal  one.  If  the 
company  had  added  the  value  of  the  improvements  made  annu- 
ally upon  it,  it  would  still  have  been  perfectly  fair  and  reasona- 
ble. Or  if  it  was  to  have  eight  per  cent  on  four  millions,  and 
share  equally  above  that  with  the  Vermont  and  Massachusetts,  a 


32 


fair  proposition  was  made ; but  it  was  declined.  Mr.  Richard- 
son testified  to  the  tact  that  it  was  declined. 

Mr.  Bates.  — No,  sir,  that  is  wrong. 

Mr.  Derby.  — He  said  they  must  come  in  and  take  their 
chances.  That  is  the  substance  of  the  statement. 

Mr.  Bates. — He  was  stating  his  own  opinion. 

Mr.  Derby.  — I refer  to  a conference  of  committees,  not  con- 
clusive upon  either  party.  They  could  not  agree  upon  a basis. 
The  terms  of  the  Fitchburg  Railroad  were  fair,  but  not  accept- 
able to  the  Vermont  and  Massachusetts  line. 

23.  My  twenty-third  point  is,  that  the  plan  presented  by  the 
Vermont  and  Massachusetts  and  Troy  and  Boston  Railroads  is 
one  dependent  upon  an  arrangement  to  be  made  satisfactory  to 
the  governor  and  council.  There  is  no  provision  made  for  any 
substitute  in  case  that  negotiation  fails.  This  is  one  of  the 
defects  of  the  plan  presented,  that,  if  the  parties  cannot  agree, 
every  thing  remains  in  statu  quo.  In  such  case,  the  rails,  equi- 
page, docks,  and  elevators  will  not  be  provided,  unless  they  are 
provided  by  other  parties. 

24.  My  twenty-fourth  point  is,  that  the  State  is  fortunate  in 
having  companies  at  the  base  of  the  line,  in  the  county  of 
Middlesex,  competent  and  willing  to  carry  through  the  enter- 
prise, to  provide  the  equipage,  the  rails,  the  docks,  the  piers, 
and  elevators  which  are  required, — companies  which  control  in 
and  around  Boston  and  Charlestown  more  than  one  hundred 
acres  of  land,  with  some  fifteen  or  twenty  more  as  near  as 
Watertown,  with  extensive  cattle-sheds  upon  them;  and  that 
with  them  we  find  ample  provision  for  depot  grounds  and  for 
water-front,  and  cannot  find  it  elsewhere;  the  two  companies 
controlling  each  side  of  the  Navy  Yard,  almost  all  the  water- 
front of  Charlestown,  the  northern  side  of  Boston,  with  a fair 
prospect  of  controlling  the  Navy  Yard  itself. 

25.  Should  these  companies  be  united,  why  should  not  the 
country  — from  the  seaboard  to  the  St.  Lawrence  and  to  the 


33 


Lakes,  which  was  roused  to  life  by  the  crusades  of  Mr.  Crocker 
when  he  went  out  like  Peter  the  Hermit,  and  woke  up  the  peo- 
ple of  Vermont  and  New  Hampshire  — participate  in  the  ad- 
vantages of  these  docks  and  these  improvements  afforded  by 
the  two  lines?  Is  it  asking  too  much  to  ask  that  all  who 
inhabit  this  district  of  country  should  find  their  accommodations 
here  ? and,  if  a large  patronage  is  given  the  consolidation  on 
account  of  its  docks  and  elevators,  will  not  the  very  magnitude 
of  the  business  cheapen  the  rates  ? 

I am  requested  by  my  associate  to  read  the  testimony  of  Mr. 
Richardson  on  the  point  discussed  a few  moments  ago : — 

u Our  directors  declined  having  the  Fitchburg  Road  go  in  as 
a preferred  stock,  into  a concern  of  twenty  millions.  They 
thought  they  had  better  not  ask  it  for  themselves;  for  they  were 
going  to  make  a prosperous  line  for  all  time.  They  thought 
they  ought  not  to  ask  it  for  two  years. 

Q.  — In  other  words,  your  company  and  your  board  preferred 
to  submit  the  matter  in  this  shape,  and  to  have  the  whole  mat- 
ter left  to  commissioners,  rather  than  to  attempt  any  actual 
proposition,  or  make  any  negotiation  ? 

A.  — It  did  not  seem  that  we  could.” 

Mr.  Bates.  — In  other  words,  your  company  or  your  board 
preferred  to  leave  the  whole  matter  to  commissioners,  rather 
than  submit  any  actual  proposition,  or  make  any  negotiation  ? 

Mr.  Derby.  — The  Vermont  and  Massachusetts  utterly  de- 
clined any  negotiation  upon  the  subject,  according  to  the 
report  of  the  evidence. 

I have  so  anticipated  three  points,  the  twenty-sixth,  twenty- 
seventh,  and  twenty-eighth,  in  presenting  the  possibility  of  fail- 
ure and  the  offers  of  the  Fitchburg  line,  and  now  pass  to  the 
twenty-ninth. 

29.  Dividends  are  essential  to  credit.  I may  have  glanced 
at  this  point;  but  I will  enlarge  upon  it.  If  twelve  or  thir- 
teen millions  of  dollars  are  to  be  raised,  can  a company 
6 


34 


which  is  paying  but  one  and  a half  per  cent  on  the  average,  or 
even  four  per  cent  on  two  or  three  millions,  go  into  the 
market  and  raise  twelve  millions  at  the  current  rates  of 
interest  ? My  idea  is,  that  the  Fitchburg  Road,  and  the  other 
roads  which  may  be  associated  with  it,  can  carry  on  this  enter- 
prise only  by  preserving  their  dividends.  Without  dividends, 
they  are  discredited.  I can  remember,  in  the  history  of  the 
Fitchburg  Railroad,  the  time  when  it  felt  called  upon  to 
lay  a double  track.  It  purchased  the  iron  at  forty  dollars  a 
ton,  and  laid  down  a second  track  in  anticipation  of  the  future, 
thereby  saving  two  hundred  thousand  dollars  on  the  cost  of 
this  track,  which,  very  fortunately  for  the  State,  is  down,  ready 
for  use,  at  half  the  cost  of  such  a track  to-day.  But  the  conse- 
quence was  a suspension  of  the  dividends  for  two  years ; and  the 
credit  of  the  road  was  seriously  impaired.  The  stock  had  been 
as  high  as  a hundred  and  thirty  dollars  per  share  : it  fell  to 
sixty-two ; and  it  was  difficult  to  raise  money  except  at  extra 
interest,  and  this  the  Fitchburg  Road  never  paid  while  I was 
connected  with  it.  The  Fitchburg  line  has  felt  the  difficulties 
attending  such  a state  of  things,  and  does  not  want  to  get  into 
it  again.  It  would  preserve  its  dividends  as  a basis  for  credit ; 
and,  should  it  be  associated  with  any  other  line  in  Massachu- 
setts, they  must  maintain  their  credit.  Without  dividends 
there  is  no  credit;  and,  without  credit,  the  company  has  no 
means  to  make  improvements.  You  must  have  the  dividends 
to  secure  the  improvements. 

30.  The  thirtieth  point  which  I present  is,  that  such  docks 
as  I have  suggested  are  in  progress,  and  nearly  finished,  and  the 
results  will  be  immediate.  They  are  moving  pari  passu  with 
the  progress  of  the  tunnel,  and  will  be  ready  for  the  reception 
of  the  business  of  the  tunnel. 

31.  The  next  point  to  which  I advert  is,  that,  by  this  mea- 
sure before  you,  the  State  permits  the  tunnel  to  be  mort- 
gaged. It  is  proposed  that  the  property  of  the  Troy  and 


35 


Greenfield  Road  shall  come  into  the  consolidation.  It  takes 
with  it  the  tunnel.  The  property  of  the  Troy  and  Boston  and 
that  of  the  Vermont  and  Massachusetts,  are  also  absorbed. 
Their  property,  encumbered  with  debt,  is  to  come  into  the  con- 
solidation with  the  tunnel ; the  property  of  the  State,  free  from 
debt,  is  thus  absorbed,  and  authority  is  given  to  the  parties  to 
raise  money.  If  they  are  to  raise  money,  they  are  to  raise  it 
on  the  credit  of  the  tunnel,  as  well  as  on  the  credit  of  the  other 
property.  I so  read  and  so  understand  the  bill,  — that  the  tun- 
nel comes  in  as  part  of  the  property,  and  the  State  takes  its  pay 
in  stock.  Now,  gentlemen,  I submit  that  the  tunnel  should  not 
be  directly  or  indirectly  mortgaged.  It  is  a trust  for  the  whole 
State.  If  pledged,  it  may  be  grasped  and  perverted  by  specu- 
lators. It  should  not  be  placed  in  such  a predicament ; and  in 
behalf  of  the  road  that  I represent,  and  in  behalf  of  the  whole 
State  of  Massachusetts  (for  I think  I represent  it  in  the  ar- 
gument), I protest  against  pledging  this  great  work  of  im- 
provement, which  it  has  taken  us  so  much  time  to  secure. 

Mr.  Allen.  — Won’t  you  tell  me  what  section  of  the  bill 
allows  the  tunnel  to  be  mortgaged?  There  is  no  section  in  the 
bill  which  authorizes  a mortgage  of  the  tunnel. 

Mr.  Derby.  — I assume  it  from  the  terms  of  the  bill. 

Mr.  Allen. — -Your  assumption  is  not  founded  upon  any 
thing  which  that  bill  contains. 

Mr.  Derby.  — I will  ask  you  whether  the  associated  compa- 
nies are  not  at  liberty  to  incur  debt  and  to  issue  bonds. 

Mr.  Allen.  — They  are  not  at  liberty  to  mortgage  the  tunnel. 

Mr.  Derby.  — Will  you  answer  my  question  ? I have  an- 
swered yours. 

Mr.  Allen.  — Do  you  not  know  that  the  Supreme  Court  ot 
Massachusetts  have  held  that  a railroad  has  not  authority  to 
mortgage  its  franchise  ? 

Mr.  Derby. — I do  not  say  that  it  can  make  a formal  mort- 
gage; but  I say  that  it  has  a right  to  incur  a debt,  and,  when  it 


36 


incurs  a debt,  it  mortgages  its  property  to  pay  it.  The  creditors 
have  a remedy  against  the  property.  I do  not  think  express 
and  positive  power  is  given  to  mortgage  the  tunnel;  but  the 
bill  virtually  gives  authority  to  mortgage  it,  by  combining  com- 
panies that  are  in  debt,  and  giving  the  corporation  authority  to 
incur  debts.  When  the  question  of  making  a State  loan  to  the 
Western  Railroad  first  came  up,  it  was  argued  by  the  late  Mr. 
Hallett ; and  I could  not  reply  to  it  except  by  admitting  the  fact, 
that,  by  granting  a loan,  the  State  was  mortgaged.  I say,  that, 
under  this  bill,  there  would  be  a virtual  pledge  of  the  tunnel.  It 
is  made  the  basis  of  credit  on  which  money  is  to  be  raised ; and, 
if  that  does  not  amount  to  a mortgage  to  the  creditor,  I don’t 
know  what  it  is. 

Well,  gentlemen,  they  say  that  a debt  is  not  a mortgage.  It 
calls  for  interest  ; it  may  exclude  the  stockholder.  The  Fitch- 
burg Railroad  Company  do  not  wish  to  have  their  property 
put  where  needy  companies  can  pledge  it.  They  favor  no  such 
arrangement ; and  they  hesitate  to  intrust  this  property  to  the 
care  of  these  parties  who  are  asking  power  under  this  bill,  to 
which  I will  presently  advert. 

35.  I pass  less  material  points,  and  now  draw  your  attention, 
gentlemen,  to  the  defects  of  the  bill,  or  to  some  of  its  most 
glaring  defects. 

The  bill  provides,  as  I understand  it,  that,  until  the  new  com- 
pany is  organized  and  fully  consolidated,  there  shall  be  chosen 
three  directors  on  the  part  of  the  Vermont  and  Massachusetts 
Road,  three  directors  on  the  part  of  the  Troy  and  Boston  Road, 
three  directors  on  the  part  of  the  Fitchburg  Road,  and  there 
may  be  four  appointed  by  the  State,  if  it  goes  into  the  consoli- 
dation ; and  full  power  is  given  to  these  directors  to  expend 
money  for  improvements.  They  may  lay  down  double  tracks 
upon  the  whole  line  ; they  may  do  whatever  they  please.  These 
directors  are  omnipotent. 

There  are  six  directors  representing  inferior  interests;  for 


37 


the  Fitchburg  property  is  seven  millions,  the  Vermont  and  Mas- 
sachusetts property  may  be  two  millions,  over  and  above  its 
debt;  and  the  property  of  the  Troy  and  Boston  is  less  than 
half  a million  over  and  above  its  debt.  The  two  and  a half 
millions  have  twice  the  power  that  is  conferred  upon  the  seven 
millions:  they  can  vote  it  down.  The  Troy  and  Boston  and 
the  Vermont  and  Massachusetts  Roads  — one  of  them  a foreign, 
and  the  other  a partly  foreign  corporation  — have  the  power  to 
vote  down  the  Fitchburg  Road;  and,  if  they  could  get  one  of 
the  directors  of  the  State  to  side  with  them,  they  would  have  a 
preponderance  in  power  in  the  whole  vote  of  the  directors  of 
this  company,  should  it  be  joined  by  the  State. 

Now,  gentlemen,  I submit  to  you  with  great  confidence  that 
this  is  entirely  unjust,  unfair,  and  unsafe  for  us  and  for  the 
State.  It  should  not  be  permitted.  Why  should  the  power  be 
taken  from  the  Fitchburg  Road,  and  confided  to  these  gentle- 
men ? What  sin  has  the  Fitchburg  Road  committed  ? It  began 
in  extreme  poverty.  For  one  or  two  years,  the  subscription  to 
the  stock  stood  at  four  hundred  and  fifty  thousand  dollars;  and 
there  was  a clause  in  the  subscription  that  not  a blow  should  be 
struck  until  six  hundred  thousand  dollars  was  subscribed;  and 
from  month  to  month,  as  the  directors  met,  as  many  stockhold- 
ers died  or  left  as  were  added  to  the  stock  list.  The  enterprise 
seemed  to  be  upon  its  last  feet.  I recollect  very  well  meeting 
with  the  directors  one  evening  in  a gloomy  room  at  Earle’s 
Coffee  House,  when  Mr.  Crocker  rose  from  his  seat  and  went 
to  the  mantle-piece,  where  two  tallow  candles  were  burning 
with  a flickering  light,  and  blew  out  one  of  them,  suggesting 
that  the  road  could  afford  but  one  candle  in  its  condition  at 
that  time.  It  had  no  Boston  stock  list : Bostonians  did  not 
come  to  its  aid.  I think  I was  the  only  Bostonian  in  the  di- 
rection ; and  perhaps,  if  I had  not  held  a farm  in  Middlesex  Coun- 
ty, I might  not  have  been  there.  I was  there,  I am  happy  to 
say,  and  did  what  I could  to  uphold  the  spirits  of  my  associates. 


38 


But  finally  that  prince  of  contractors,  Belknap  (let  me  speak  of 
him  with  respect,  for  he  is  no  more),  came  forward  and  sub- 
scribed the  remaining  one  hundred  and  fifty  thousand  dollars 
for  the  stock;  and  the  road  went  on.  I went  out  to  England 
with  Mr.  Crocker,  and  bought  the  iron  for  eighteen  dollars  and 
seventy-five  cents  per  ton ; and,  when  it  reached  Boston,  the  du- 
ty was  more  than  the  cost  of  the  iron.  But  we  bought  it  cheap- 
er than  any  road  in  New  England  had  ever  bought  its  iron  down 
to  that  period.  The  road  grew  up  in  poverty.  It  was  made  a 
surface  line  ; it  followed  the  river  bank;  it  was  a cheap  road  ; 
there  were  no  profits  for  the  directors  in  that  road,  no  sacrifices 
upon  its  bonds  or  stock.  It  gradually  built  up  a business. 
The  business  was  carefully  estimated  in  advance.  I signed, 
with  Mr.  Crocker,  the  first  estimate  of  business,  which  was 
two  hundred  thousand  dollars  a year.  I signed  the  first  report 
after  the  road  was  finished  ; and  I think  we  reported  an  income 
of  two  hundred  and  one  thousand  dollars,  within  one  per  cent 
of  the  estimate  of  those  who  built  it.  Since  then,  gentlemen, 
the  business  has  been  gradually  carried  up  to  one  million,  three 
hundred  and  twenty-five  thousand  dollars,  — the  income  of  the 
past  year,  by  thrift,  economy,  and  caution.  The  Fitchburg,  in- 
stead of  watering  its  stock  like  the  Troy  and  Boston,  has  put 
in  from  income  two  millions,  perhaps  three  millions,  of  dollars  in 
purchases  and  improvements,  which  have  been  consolidated 
into  the  road.  It  has  thus  made  a basis  for  consolidation.  Now, 
gentlemen,  when  a road  has  pursued  such  a course,  attained  the 
credit  and  the  strength  which  the  Fitchburg  possesses,  are  you 
to  punish  it  by  yoking  it  with  a weak  helpmate  at  the  other 
end  of  the  line,  and  give  the  same  power  to  a road  out  of  the 
State,  which  has  watered  its  stock,  that  you  give  to  the  Fitch- 
bur^  Railroad  at  home,  — a road  belonging  to  the  country  people 
of  Massachusetts?  Are  you  to  take  away  the  dividend  from  the 
widow  and  the  orphan,  who  represent  many  of  the  original  stock- 
holders, for  the  purpose  of  benefiting  lines  out  of  this  State? 


39 


That  is  one  of  the  questions  which  I think  presents  itself  with 
great  force  to  the  committee  I have  the  honor  to  address. 

I have  but  a few  more  suggestions  to  make.  I have  pointed 
out  the  principal  objections  to  the  bill.  You  will  find  other  ob- 
vious objections;  and  I will  not  detain  you  by  presenting  my 
remaining  points  that  will  readily  occur  to  you.  Let  me  suggest 
that  I want  this  enterprise  to  start  in  strength,  and  not  in  weak- 
ness. The  terminal  point  of  this  line  is  not  at  the  tunnel,  nor 
at  Oswego.  I can  see  before  me,  in  the  future,  this  line  consoli- 
dated farther  on  with  a line  along  the  shore  of  Lake  Ontario, 
the  contract  for  which,  with  the  rails  laid,  is  at  the  rate  of 
twenty-one  thousand  five  hundred  dollars  a mile,  — a contract 
held  by  Mr.  Phelps,  wdio  addressed  you  yesterday.  It  is  a road 
that  is  to  extend  across  Canada,  in  connection  with  the  Great 
Western.  I can  see  these  roads  consolidated,  and  forming 
hereafter  one  line  to  reach  Chicago  by  the  Michigan  Central, — 
a Boston  enterprise.  I see  them  in  the  future  combined 
into  one.  I can  see  them  in  the  future,  gentlemen,  reaching 
the  North-Pacific  Road,  or  beyond  it,  and  forming  a line  to  the 
Pacific.  Why  should  not  we  have  a line  to  the  Pacific?  Why 
should  the  Pennsylvania  Central  Road  be  the  only  road,  or  one 
of  the  chief  roads,  to  the  Pacific?  Why  should  Philadelphia 
and  New  York  have  their  lines  to  the  Pacific,  and  Boston  not 
have  her  line  also?  Begin  this  in  weakness,  and  you  lose  it; 
begin  it  in  strength,  and  you  secure  it,  and  make  Boston  the 
terminal  point  on  one  side,  and  Puget  Sound  the  terminal 
point  on  the  other.  Lay  the  foundation  for  great  success.  Go 
in  strength,  I say  again,  and  not  in  weakness,  for  the  commerce 
of  the  continent,  in  which  Boston  is  destined  largely  to  partici- 
pate. If  you  are  true  to  yourselves,  true  to  the  State,  and  true 
to  Boston,  you  accomplish  what  should  be  accomplished.  We 
are  nearer  to  Europe  than  New  York.  You  are  to  take  the 
laurels  from  New  York,  and  transfer  them  to  Boston. 

Now,  gentlemen,  I have  brought  my  remarks  to  a close.  I 


40 


began  with  thirty-nine  articles,  — as  many  as  there  are  in  the 
constitution  of  the  Episcopal  Church,  to  which  I belong.  I 
have  made  some  thirty-nine  points,  most  of  which  I have  sub- 
mitted to  you.  They  are  my  articles  of  faith  : I have  confi- 
dence in  them.  Let  me  close  with  one  more  suggestion.  Your 
committee  reminds  me  of  a committee  I had  the  honor  to  ad- 
dress for  the  tunnel  loan  at  the  commencement  of  the  enterprise. 
At  that  time  a highly  respected  gentleman  from  Springfield,  Mr. 
George  Bliss,  for  many  years  the  president  of  the  Western 
Railroad,  was  speaker  of  the  house;  and  his  intimate  friend, 
Judge  Warren,  also  an  intimate  friend  of  Mr.  Swift,  of  the  Bos- 
ton and  Albany  line,  was  president  of  the  Senate.  They  gave  us 
the  committee  which  reported  State  loan  for  the  tunnel ; and, 
when  I addressed  them,  I took  the  liberty  to  say  that  I was  led 
to  believe  that  some  of  them  did  not  favor  the  enterprise  I ad- 
vocated. “But,”  said  I,  “it  gives  me  great  pleasure,  gentlemen, 
to  address  you.  I do  not  wish  to  address  those  who  go  for  this 
enterprise : I wish  to  address  those  who  are  opposed  to  it.” 
Now,  I see  that  the  State,  in  its  wisdom,  — and  I have  no  douht 
it  has  acted  very  wisely,  — has  last  evening  selected  the  chair- 
man of  this  committee  to  represent  its  interests  as  State  direc- 
tor in  the  Boston  and  Albany  Railroad.  I am  satisfied  they 
have  made  a very  good  selection.  I am  very  happy  that  they 
have  made  it ; but,  when  I find  a gentleman  so  prominent  in  the 
Boston  and  Albany  Road  at  the  head  of  this  committee,  I ven- 
ture to  suggest  my  hope  and  belief  that  all  minor  interests  will 
subside  when  the  great  interests  of  Massachusetts  are  in  ques- 
tion. I shall  look  to  that  gentleman,  if  our  arguments  are 
sound,  as  I believe  they  are,  to  favor  in  his  report  the  consoli- 
dation of  stronger  lines  than  those  now  presented  to  this  com- 
mittee. 

Mr.  Bates.  — Do  you  put  the  Boston  and  Albany  Railroad 
company  into  the  consolidation  ? 

Mr.  Derby.  — No,  sir.  I think  that  is  unnecessary.  They 


41 


are  now  doing  very  well  as  they  are.  They  are  entitled  to  very 
great  credit  for  what  they  have  done  since  they  were  consoli- 
dated. 

Judge  Thomas.  — If  it  is  not  improper,  I should  like  to  ask 
you  one  question,  — you  have  made  thirty-three  points  here,  — 
and  that  is,  What  does  the  Fitchburg  propose  to  do  ? Is  your 
measure  confined  to  the  consolidation  of  the  Fitchburg  Rail- 
road and  the  Boston  and  Lowell  Road,  or  does  it  comprehend 
and  include  the  Fitchburg,  the  Vermont  and  Massachusetts,  the 
Troy  and  Greenfield,  and  the  tunnel,  to  the  New- York  line? 

Mr.  Derby.  — I propose  hot  to  open  the  case,  which,  by  the 
order  of  the  committee,  will  be  presented  on  Tuesday. 


. 


